According to Michael del Castillo, a cryptocurrency journalist, Acting Comptroller of the Currency Keith Noreika is open to bitcoin companies, exchanges, and trading platforms applying to gain regulated bank status within the US.
The Office of the Comptroller of the Currency, an independent bureau within the United States Department of the Treasury, is a US federal agency which regulates and supervises national and foreign commercial banks. At an event by the Federal Reserve Bank of Philadelphia, Noreika stated:
“I wouldn’t be adverse to those people coming in and talking to the [Office of the Comptroller of the Currency] about how a charter could make sense for them. But that is a long process they’d have to go through, and just because you get in the door doesn’t mean you’re going to get out the door on the other side.”
In Licensing Bitcoin Companies, US and Japan’s Approach Differs From China
Noreika and the Office of the Comptroller of the Currency are actively exploring efficient methods of introducing a national licensing program for bitcoin businesses. As of now, a few states including New York have state-specific licensing programs in place such as BitLicense. But the majority of startups, exchanges, trading platforms, and businesses in the cryptocurrency sector have expressed their concerns over regulatory frameworks like BitLicense that are expensive and impractical to comply with.
Already, the Japanese government has introduced a nationwide licensing program for Japanese bitcoin and cryptocurrency exchanges. On September 29, 11 large-scale Japanese exchanges including BitFlyer were licensed and authorized by the Japanese government, as an official government document revealed.
The authorization of cryptocurrency exchanges and the introduction of a nationwide licensing program for trading platforms would likely trigger an increase in demand from institutional and retail traders, as it would allow the US cryptocurrency exchange market to mature and develop at an exponential rate.
Since existing regulated exchanges such as the US$1.6 billion bitcoin trading platform Coinbase and the Winklevoss twins-owned exchange Gemini have started developing trading platforms for institutional investors, the regulation of exchanges will support the process of providing sufficient liquidity for large-scale traders.
Moving Closer to Bitcoin ETF Approval
In March, the US Securities and Exchnage Commission denied a proposal for a bitcoin exchange-traded fund (ETF) by the Winklevoss twins due to the lack of regulations for overseas cryptocurrency exchange markets.
At the time, Bitcoin non-profit research and advocacy center Coin Center executive director Jerry Brito noted:
“The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the US and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?”
If the Office of the Comptroller of the Currency moves to license bitcoin exchanges, it will portend a significantly higher probability of bitcoin ETFs being approved, since overseas markets such as Japan and South Korea have evolved into mature and well-regulated markets.